Harry Reid to drop IMF from Ukraine bill

Senate Majority Leader Harry Reid will drop a provision to reform the International Monetary Fund from a bill to help Ukraine — a move that could clear the way to send an aid and sanctions package to the president’s desk.

Republicans have balked at President Barack Obama’s call to include the language, vowing to reject the provisions in the House. Reid acknowledged that while the Ukraine package would likely have passed the Senate, it was “headed to nowhere” in the GOP-led House.

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“I feel very strongly about IMF reform; we need to get that done,” the Nevada Democrat told reporters Tuesday. “But this bill is important. As [Secretary of State] John Kerry said yesterday, he wants both of them, but the main thing is to get the aid now. So, I’m following John Kerry’s lead.”

The tussle in Congress over reforming the IMF has threatened the unified message officials in Washington had hoped to send to Russian President Vladimir Putin and those responsible for the invasion of Ukraine. And the administration did not hide its disappointment Tuesday afternoon over the removal of the IMF language.

“We are deeply disappointed by the news that Republican opposition has forced the Senate to remove the [IMF] reforms from the Ukraine assistance package,” said Treasury Department spokeswoman Holly Shulman.

Reid signaled on Tuesday evening that the Senate would vote on the Ukraine bill on Thursday, though Republicans have not relented on their demands to secure amendment votes on even more changes — such as one involving energy exports to Ukraine.

With Democrats dropping the IMF provisions, Republicans in return will give up their demand that Congress vote to delay the administration’s changes to rules cracking down on the political activity of nonprofits.

Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.) said erasing the IMF changes is probably the only way to get a bill to the president’s desk this week.

“Is that acceptable? No,” Menendez said. “I wouldn’t have put it in if I didn’t think it was important,”“

Backers of including the IMF reforms in the Ukraine deal note that it will help boost the organization’s lending capacity. The United States has already pledged $1 billion in loan guarantees to Kiev, and Capitol Hill also overwhelmingly supports that kind of economic assistance.

The Senate package shifts $63 billion from the IMF’s crisis account to its general fund and makes good on a 2010 agreement to give emerging economies more influence at the organization, while keeping the United States as the only country with veto power. The United States is the lone holdout country that has not ratified the IMF deal, which was struck more than three years ago.

But many congressional Republicans have raised concerns about potential taxpayer risk with the IMF agreement, while arguing that the deal reduces the United States’ influence at the organization. While they wouldn’t mind including the IMF provisions, House Democrats have said a congressional dispute over the reforms should not slow down the process of getting aid to Kiev.

Senate Minority Leader Mitch McConnell (R-Ky.), who voted to advance the Ukraine bill on Monday evening, had demanded earlier Tuesday that the IMF provisions be dropped from the bill and said it will not pass the GOP-led House otherwise. The legislation, written by Menendez and Sen. Bob Corker (R-Tenn.), cleared a procedural hurdle with a 78-17 vote on Monday.

McConnell told reporters that getting rid of the IMF changes was a “step in the right direction” but indicated that his conference will still seek more changes to the bill. Wyoming Sen. John Barrasso, the fourth-ranking Senate Republican, is promoting an amendment that would expedite liquified natural gas exports to Ukraine.

“I think we ought to have some more amendments, but I do think we ought to wrap the bill up this week,” McConnell said. “There’s a strong bipartisan feeling that we need to do an aid package for Ukraine and do it soon. I don’t think that’s damaged by allowing Sen. Barrasso to offer his amendment on LNG.”

But Reid was dismissive of Republican attempts to secure amendment votes on the bill.

“This is quite remarkable to me,” Reid said. “I don’t know when enough is enough. We’re going to finish this week. We’re going to do Ukraine as I said. We’re gonna do unemployment [insurance] and we have to do [the doc fix]. So there’s only a limited amount of time that we have.”

The Senate’s top Democrat said he had conversations with Menendez, Corker and Sen. John McCain (R-Ariz.), as well as administration officials, on dropping the IMF provisions. McCain confirmed earlier Tuesday that Reid told him IMF would disappear from the Ukraine bill, adding of Reid: “He doesn’t usually lie to me. Sometimes he does, but not always.”

Leaders in the Republican-led House welcomed Reid’s move to relent on the IMF reforms. Michael Steel, a spokesman for Speaker John Boehner (R-Ohio), said: “As the speaker has said all along, that is the only way to get Ukraine the help it needs as quickly as possible.”

Lawmakers on the House Foreign Affairs Committee approved legislation Tuesday that would slap sanctions — including asset freezes and visa bans — against key Russian officials, as well as provide an assortment of aid to the new, pro-Western government in Kiev.

The legislation is much like the Senate’s bill, except for the IMF provisions. GOP leaders said Tuesday that the full chamber will vote on the measure later this week.

“I believe [the bill] will send a clear message of American resolve that will be heard in Kiev, in Moscow, and throughout the region,” said House Foreign Affairs Committee Chairman Ed Royce (R-Calif.).

Separate from the IMF dispute, the battle over Ukraine aid had also turned partisan. Reid contended on Monday that the GOP sent the wrong message by holding up Senate action two weeks ago, when the two parties deadlocked on attempts to quickly pass aid before breaking for recess.

In a floor speech earlier Tuesday, McConnell defended his party.

“The majority leader seems determined to blow up the process, too,” McConnell said. “Yesterday he actually came to the floor to effectively blame Republicans, believe or not, for the invasion of Crimea. I mean, who writes this stuff? It’s just completely unhelpful.”

Corker admitted Tuesday his party’s concerns over the IMF provision reflect a “more isolationist” and “less adventurous” GOP and war-weary public. But the top Republican on the Senate Foreign Relations Committee also defended the IMF provision shortly after McConnell’s comments and called Ukraine’s situation a “poster child” for IMF reform.